TOKYO (Reuters) - A senior International Monetary Fund (IMF) official said on Monday that it was premature for the Bank of Japan to discuss an exit from massive monetary stimulus given that more time and efforts are needed to reach its 2 percent inflation target.

People walk past the Bank of Japan building in Tokyo, Japan June 16, 2017. REUTERS/Toru Hanai

“Right now there’s a need for continued accommodation because the inflation rate in Japan remains well below target,” David Lipton, the IMF’s first deputy managing director, told Reuters in an interview.

“There’s need for the reflation effort to become more advanced.”

The comments came after BOJ Governor Haruhiko Kuroda reassured markets on Friday the central bank will lag well behind the Federal Reserve in dialling back its massive stimulus program, with inflation far from reaching his 2 percent target.

Lipton, in Tokyo for the IMF’s “Article 4” consultations with Japanese officials, spoke to Reuters after the release of the Fund’s annual report on the world’s third-largest economy.

Lipton hailed the BOJ’s yield curve control policy, which targets interest rates rather than the pace of government bond purchases.

The IMF has urged the BOJ to clarify that stance and enhance communication of its policy, as well as to “phase out” a loose pledge to keep increasing its government bond holdings at an annual pace of 80 trillion yen ($721.05 billion).

“There’s obviously quantities that go up and down when you do yield curve control, but you’re doing it with a focus on price rather than a focus on quantity,” Lipton said. “We think that switch in strategy is a useful one and likely to be a sustainable one.”

If the BOJ’s accommodative policy is backed with the other two arrows - fiscal and structural policies - of Prime Minister Shinzo Abe’s three-pronged “Abenomics” policy, inflation will get to 1 and 1-1/2 range within a few years, Lipton added.

“To get to 2 percent requires more than is presently being done. We think in particular the third arrow will have to be strengthened,” he said.

Lipton said the IMF feels “very strongly” that the 2 percent inflation target should be maintained, adding that it was not forecasting that the present policy will achieve the goal anytime soon.